TRENTON — Hurricane Sandy has dealt a vicious blow to tax bases in Ocean and Monmouth counties, reducing overall property values by more than $5 billion and robbing local governments and schools of about $77 million in potential revenue, preliminary figures show.

SEE INTERACTIVE DAMAGE MAP BELOW

The data, culled from the tax boards in both coastal counties, provides the first glimpse at the destruction the storm exacted on the property values of homes and businesses, the lifeblood of any local government.

Property taxes are the main source of revenue on the local level. As property values drop, mayors and school boards must decide whether to cut services or programs, raise taxes or seek additional revenue from other sources if they want to keep the status quo.
As a result, officials in the two counties hardest hit by Sandy are hoping for a bailout from the Christie administration, along with help from the federal government in the form of low-interest loans. They are also banking on the resilience of residents and businesses to rebuild quickly and restore the tax rolls to their pre-Sandy levels.

“We only have two-thirds of what we had,” Mantoloking Mayor George Nebel said. “We hope people will rebuild to bring the town back.”

There’s a lot of rebuilding to be done in Mantoloking, which saw its taxable value plunge by 32 percent as a result of Sandy, the largest percentage decline of any town in the two counties, according to preliminary figures. Assessors reduced the taxable value of 570 properties in town by a combined $527 million, which could cut into property tax revenue by roughly $2.9 million, based on 2012 tax rates.

In Ocean County, at least 13,000 properties saw their assessed value reduced by a combined $4.6 billion due to Sandy. In Monmouth County, more than 17,000 properties were reduced by a total of more than $503 million, but county officials cautioned that while the figure represents a large sampling, it is not the entire picture.

State officials gave local assessors instructions on how to calculate the preliminary losses from Sandy: Where buildings were washed away, they were now worth nothing to the municipality and the land under them was counted at half their pre-Sandy value, local officials said.

In Toms River, the largest municipality in the two counties, the storm wiped out about 300 homes and an estimated $3 billion in taxable value, leaving a potential $12 million revenue shortfall as township officials put together a budget. Adding in the county and the school district, the potential hole soars to around $46 million based on 2012 tax rates.

Across the two counties, nearly half of the potential loss in property tax dollars would have gone to school districts.

For the Manasquan school district, a nearly $79 million loss in property values meant a possible reduction of more than $673,000, according to records. The school board on Tuesday approved a $22.5 million budget that includes a tax increase of about $225 to the average homeowner just to maintain its current level of programs, said acting Superintendent Robert Mahon.

It was necessary, he said, because “we had a strong concern about education and we didn’t want to diminish the programs.” He said he hopes to eliminate the need for that tax increase with a FEMA community disaster loan.

“We were very concerned about it because we know the community had suffered tremendously,” Mahon said. “We know they’re in the process of rebuilding and we certainly didn’t want to be a negative impact on our ability to do that.”

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Frank Belluscio, acting deputy executive director of the New Jersey School Boards Association, said the Christie administration’s proposed state aid to schools would not make up for Sandy losses.

“It is something very much on the minds of people in the school districts,” he said. “We’re looking for that to be an issue going forward and something that will have to be addressed.”

The precipitous drop in property values has Toms River Mayor Thomas Kelaher, like other mayors, mulling a solution considered taboo in the financial world: borrowing millions to close the budget gap, ensuring the next generation of residents will help pick up the tab.

“I don’t know if we have a choice,” Kelaher said. “Our town was devastated, and we have the same expenses, but less revenue.”

Wall Street has taken notice of the diminished tax bases, cutting the bond rating in December for Seaside Heights — which saw its tax base drop by $35 million, or 5 percent — and putting at least five others, including Toms River, on notice. A drop in credit rating would make it more costly for towns to borrow just as they may need the cash to pay the bills.

The losses come at a critical time for communities where revenues were already starting to sink due to the housing crisis, forcing a rash of tax appeals. Before Sandy, many towns had started revaluations, which residents of the northern barrier island criticized as local officials’ attempts to shake them down for more taxes.

Those revaluations in Ocean County have been scrapped for now, said Chelsea Skuby, assistant county tax administrator. Last year, tax appeals accounted for $1 billion in lost taxable property values in both counties, records show.

One stretch of road that shows how Sandy submerged the value of property is Monmouth County’s Ocean Avenue, which features tony beach clubs that attracted thousands of sunbathers and sit on some of the richest real estate in the state. They were right in the storm’s path and sustained some of the worst damage.

For example, the Driftwood Beach Club in Sea Bright was assessed at $10.8 million before Sandy struck. It was destroyed by the storm and county officials now put the value of the parcel at $4.3 million, the largest drop in value throughout the county, records show.

In 2012, the club paid $194,076 in property taxes. This year, if the tax rate remains the same, the figure would drop to about $78,000.

In all, tax records show 558 properties along Ocean Avenue were assessed at $377.2 million in 2012. After inspection by tax assessors earlier this year, the taxable value of the property was cut about $60 million, or nearly 20 percent.

To help tackle the potential tax ratable disaster, towns are dipping into the Federal Emergency Management Agency’s community disaster loan program, available to those with projected revenue shortfalls of at least 5 percent from last year into 2015. So far 33 towns have applied. Belluscio noted that Gov. Chris Christie has urged school districts to also apply for FEMA loans.

“We’re counting on that (loan) to plug our gap,” said Sea Bright Mayor Dina Long, whose town lost an estimated 13 percent of last year’s tax base and expects that figure to grow. “We do anticipate the tax base is going to return but it’s going to take a few years.”

But Long worries that the program, which sets limits on how much towns can borrow, may not be enough. She called the loss of ratables for her town “very serious.”

Money from the federal Sandy aid package to help with towns’ budgets should start flowing to communities by the end of next month. They include funds to help towns pay for what FEMA did not reimburse and money to help towns pay for code enforcement officials to ensure homes are built safe and are up to code.

And Christie included $40 million in his proposed $32.9 billion state budget to help with looming property tax increases.

Reduced tax ratables are only one of the losses covered by that loan program. It can also include losses from projected tax appeals, tax collections, parking meters, hotel and motel taxes, and beach badges, among other shortfalls.

To help balance the town’s proposed $6.2 million budget, Sea Bright has borrowed $3 million in emergency funding so far and may go to the market to borrow again, Long said.

Besides a reduction in the tax base, the town expects to lose money from beach badge sales, utilities, court fines and many other sources.

“It’s everything,” Long said.

Star-Ledger staff writer Eric Sagara contributed to this report.

Interactive Damage Map

Hurricane Sandy dealt a tremendous blow to the tax bases of several towns in Monmouth and Ocean counties. Click the towns on the map to show information on the percent of the tax base lost, as well as preliminary estimates on what it could cost towns, schools and counties in lost revenue. The loss in tax base not only reflects estimated losses due to Sandy, but also from other factors, like property tax appeals. Graphic by Stephen Stirling/The Star-Ledger.